If there were no limits to human rationality administrative theory would be barren. It would consist of the single precept: Always select that alternative, among those available, which will lead to the most complete achievement of your goals.

Simon (1945, p. 240); As cited in:

The techniques of the practitioner are usually called 'synthetic'. He designs by organizing known principles and devices into larger systems.

Most of the propositions that make up the body of administrative theory today share, unfortunately, this defect of proverbs. For almost every principle one can find an equally plausible and acceptable contradictory principle.

Broadly stated, the task is to replace the global rationality of economic man with a kind of rational behavior that is compatible with the access to information and the computational capacities that are actually possessed by organisms, including man, in the kinds of environments in which such organisms exist.

It is not my aim to surprise or shock you – but the simplest way I can summarize is to say that there are now in the world machines that think, that learn and that create. Moreover, their ability to do these things is going to increase rapidly until – in a visible future – the range of problems they can handle will be coextensive with the range to which the human mind has been applied.

Before we can establish any immutable 'principles' of administration, we must be able to describe, in words, exactly how an administrative organization looks and exactly how it works.

p. xiv.

The world you perceive is drastically simplified model of the real world.

p. xxvi.

Whereas economic man maximizes - selects the best alternative from among all those available to him, his cousin, administrative man, satisfices - looks for a course of action that is satisfactory or "good enough."

p. xxix.

Economic man deals with the "real world" in all its complexity. Administrative man recognizes that the world he perceives is a drastic simplified model... He makes his choices using a simple picture of the situation that takes into account just a few of the factors that he regards as most relevant and crucial.

A major task in organizing is to determine, first, where the knowledge is located that can provide the various kinds of factual premises that decisions require.

p. 24.

Before a science can develop principles, it must possess concepts. Before a law of gravitation could be formulated, it was necessary to have the notions of “acceleration” and “weight.”

p. 43.

The first task of administrative theory is to develop a set of concepts that will permit the description, in terms relevant to the theory, of administrative situations. These concepts, to be scientifically useful, must be operational; that is, their meanings must correspond to empirically observable facts or situations.

p. 43.

In the process of decision those alternatives are chosen which are considered to be appropriate means of reaching desired ends. Ends themselves, however, are often merely instrumental to more final objectives. We are thus led to the conception of a series, or hierarchy, of ends. Rationality has to do with the construction of means-ends chains of this kind.

p. 62.

The fact that goals may be dependent for their force on other more distant ends leads to the arrangement of these goals in a hierarchy - each level to be considered as an end relative to the levels below it and as a mean to the levels above it.

p. 62.

The function of knowledge in the decision-making process is to determine which consequences follow upon which of the alternative strategies. It is the task of knowledge to select from the whole class of possible consequences a more limited subclass, or even (ideally) a single set of consequences correlated with each strategy.

p. 78.

It is impossible for the behavior of a single, isolated individual to reach a high degree of rationality. The number of alternatives he must explore is so great, the information he would need to evaluate them so vast that even an approximation to objective rationality is hard to conceive. Individual choice takes place in rationality is hard to conceive... Actual behavior falls short in at least three ways, of objective rationality:

Rationality requires a complete knowledge and anticipation of the consequences that will follow on each choice. In fact, knowledge of consequences is always fragmentary

Since these questions lie in the future, imagination must supply the lack of experienced feeling in attaching value to them. But values can be only imperfectly anticipated.

Rationality requires a choice among all possible alternative behaviors. In actual behavior, only a very few of all these possible alternatives come to mind.

Roughly speaking, rationality is concerned with the selection of preferred behavior alternatives in terms of some system of values, whereby the consequences of behavior can be evaluated.

p. 84.

Organizations and institutions permit stable expectations to be formed by each member of the group as to the behavior of the other members under specified conditions.

p. 100.

Organizations and institutions provide the general stimuli and attention-directors that channelize the behaviors of the members of the group, and that provide those members with the intermediate objectives that stimulate action.

p. 100.

The behaviour of individuals is the tool with which the organisation achieves its targets.

p. 108.

In order to survive, the organization must have an objective that appeals to its customers, so that they will make the contributions necessary to sustain it. Hence, organization objectives are constantly adapted to conform to the changing values of customers, or to secure new groups of customers in place of customers who have dropped away. The organization may also undertake special activities to induce acceptance of its objectives by customers - advertising, missionary work, and propaganda of all sorts.

p. 114.

We will likely also find that the nature of the problem to be solved will be a principal determinant of the mix. With our growing understanding of the organization of judgmental and intuitive processes, of the specific knowledge that of the specific knowledge that is required to perform particular judgmental tasks, and of the cues that evoke such knowledge in situations in which it is relevant, we have a powerful new tool for improving expert judgment. We can specify the knowledge and the recognition capabilities that experts in a domain need to acquire, and use these specifications for designing appropriate learning procedures.

p. 137.

The principle of bounded rationality [is] the capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world — or even for a reasonable approximation to such objective rationality.

p. 198.

In these two essays [the papers of 1955 and 1956] the focus is upon ways of simplifying the choice problem to bring it within the power of human computation... The key to the simplification of the choice process in both cases is the replacement of the goal of maximizing with the goal of satisficing, of finding a course of action that is ‘good enough’. I have tried, in these two essays, to show why this substitution is an essential step in the application of the principle of bounded rationality.

Administration is not unlike play-acting. The task of the good actor is to know and play his role, although different roles may differ greatly in content. The effectiveness of the performance will depend on the effectiveness of the play and the effectiveness with which it is played. The effectiveness of the administrative process will vary with the effectiveness of the organization and the effectiveness with which its members play their parts.

If by motivation we mean whatever it is that causes someone to follow a particular course of action, then every action is motivated — by definition. But in most human behavior the relation between motives and action is not simple; it is mediated by a whole chain of events and surrounding conditions. We observe a man scratching his arm. His motive (or goal)? To relieve an itch.

p. 265.

Decision making processes are aimed at finding courses of action that are feasible or satisfactory in the light of multiple goals and constraints.

At the time of its initial publication, Public Administration helped to define this field of study and practice by introducing two major new emphases: an orientation toward human behavior and human relations in organizations, and an emphasis on the interaction between administration, politics, and policy. Without neglecting more traditional concerns with organization structure, Simon, Thompson, and Smithburg viewed administration in its behavioral and political contexts. The viewpoints they express still are at the center of public administration's concerns.

Book abstract, 1991

By public administration is meant, in common usage, the activities of the executive branches of national, state, and local governments; independent boards and commissions set up by the congress and state legislatures; government corporations, and certain agencies of a specialized character. Specifically excluded are judicial and legislative agencies within the government and nongovernmental administration.

p. 7

The function of knowledge in the decision-making process is to determine which consequences follow upon which of the alternative strategies.

The capacity of the human mind for formulating and solving complex problems is very small compared with the size of the problems whose solution is required for objectively rational behavior in the real world—or even for a reasonable approximation to such objective rationality.

The first consequence of the principle of bounded rationality is that the intended rationality of an actor requires him to construct a simplified model of the real situation in order to deal with it. He behaves rationally with respect to this model, and such behavior is not even approximately optimal with respect to the real world. To predict his behavior we must understand the way in which this simplified model is constructed, and its construction will certainly be related to his psychological properties as a perceiving, thinking, and learning animal.

A number of proposals have been advanced in recent years for the development of ‘general systems theory’ which, abstracting from properties peculiar to physical, biological, or social systems, would be applicable to all of them. We might well feel that, while the goal is laudable, systems of such diverse kinds could hardly be expected to have any nontrivial properties in common. Metaphor and analogy can be helpful, or they can be misleading. All depends on whether the similarities the metaphor captures are significant or superficial.It may not be entirely vain, however, to search for common properties among diverse kinds of complex systems... The ideas of feedback and information provide a frame of reference for viewing a wide range of situations, just as do the ideas of evolution, of relativism, of axiomatic method, and of operationalism... hierarchic systems have some common properties that are independent of their specific content...

In an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it.

We are organization watchers in our role as citizens. Increasing attention has been ﬁxed in recent years upon the functioning of society’s organizations: its large corporations and its governments. Hence this could also be described as a book for Everyman–for it proposes a way of thinking about organizational issues that concern us all.

Human beings, viewed as behaving systems, are quite simple. The apparent complexity of our behavior over time is largely a reflection of the complexity of the environment in which we find ourselves.

p. 53.

Definition of design = Everyone designs who devise courses of action aimed at changing existing situations into preferred ones. The intellectual activity that produces material artifacts is no different fundamentally from the one that prescribes remedies for a sick patient or the one that devises a new sales plan for a company or a social welfare policy for a state.

p. 130.

"Rational decision making in business organizations", Nobel Memorial Lecture 1978[edit]

Decision theory can be pursued not only for the purposes of building foundations for political economy, or of understanding and explaining phenomena that are in themselves intrinsically interesting, but also for the purpose of offering direct advice to business and governmental decision makers. For reasons not clear to me, this territory was very sparsely settled prior to World War II. Such inhabitants as it had were mainly industrial engineers, students of public administration, and specialists in business functions, none of whom especially identified themselves with the economic sciences. Prominent pioneers included the mathematician, Charles Babbage, inventor of the digital computer, the engineer, Frederick Taylor and the administrator, Henri Fayol.During World War II, this territory, almost abandoned, was rediscovered by scientists, mathematicians, and statisticians concerned with military management and logistics, and was renamed “operations research” or “operations analysis.” So remote were the operations researchers from the social science community that economists wishing to enter the territory had to establish their own colony, which they called “management science”.

During and after World War II, a large number of academic economists were exposed directly to business life, and had more or less extensive opportunities to observe how decisions were actually made in business organizations. Moreover, those who became active in the development of the new management science were faced with the necessity of developing decision-making procedures that could actually be applied in practical situations. Surely these trends would be conducive to moving the basic assumptions of economic rationality in the direction of greater realism.

Now the salient characteristic of the decision tools employed in management science is that they have to be capable of actually making or recommending decisions, taking as their inputs the kinds of empirical data that are available in the real world, and performing only such computations as can reasonably be performed by existing desk calculators or, a little later electronic computers. For these domains, idealized models of optimizing entrepreneurs, equipped with complete certainty about the world - or, a worst, having full probability distributions for uncertain events - are of little use. Models have to be fashioned with an eye to practical computability, no matter how severe the approximations and simplifications that are thereby imposed on them... The first is to retain optimization, but to simplify sufficiently so that the optimum (in the simplified world!) is computable. The second is to construct satisficing models that provide good enough decisions with reasonable costs of computation. By giving up optimization, a richer set of properties of the real world can be retained in the models... Neither approach, in general, dominates the other, and both have continued to co-exist in the world of management science.

In Administrative Behavior, bounded rationality is largely characterized as a residual category — rationality is bounded when it falls short of omniscience. And the failures of omniscience are largely failures of knowing all the alternatives, uncertainty about relevant exogenous events, and inability to calculate consequences. There was needed a more positive and formal characterization of the mechanisms of choice under conditions of bounded rationality... Two concepts are central to the characterization: search and satisficing.

If we accept values as given and consistent, if we postulate an objective description of the world as it really is, and if we assume that the decision maker's computational powers are unlimited, then two important consequences follow. First, we do not need to distinguish between the real world and the decision maker's perception of it: he or she perceives the world as it really is. Second, we can predict the choices that will be made by a rational decision maker entirely from our knowledge of the real world and without a knowledge of the decision maker's perceptions or modes of calculation. (We do, of course, have to know his or her utility function.)

If, on the other hand, we accept the proposition that both the knowledge and the computational power of the decision maker are severely limited, then we must distinguish between the real world and the actor's perception of it and reasoning about it. That is to say, we must construct a theory (and test it empirically) of the processes of decision. Our theory must include not only the reasoning processes but also the processes that generate the actor's subjective representation of the decision problem, his or her frame.

Modem mainstream economic theory bravely assumes that people make their decisions in such a way as to maximize their utility. Accepting this assumption enables economics to predict a great deal of behavior (correctly or incorrectly) without ever making empirical studies of human actors.

First, most producers are employees of firms, not owners. Viewed from the vantage point of classical [economic] theory, they have no reason to maximize the profits of firms, except to the extent that they can be controlled by owners. Moreover, profit-making firms, nonprofit organizations, and bureaucratic organizations all have exactly the same problem of inducing their employees to work toward organizational goals. There is no reason, a priori, why it should be easier (or harder) to produce this motivation in organizations aimed at maximizing profits than in organizations with different goals. If it is true in an organizational economy that organizations motivated by profits will be more efficient than other organizations, additional postulates will have to be introduced to account for it.

Organizations are systems of coordinated action among individuals and groups whose preferences, information, interests, or knowledge differ. Organization theories describe the delicate conversion of conflict into cooperation, the mobilization of resources, and the coordination of effort that facilitate the joint survival of an organization and its members.

Global rationality, the rationality of neoclassical theory, assumes that the decision maker has a comprehensive, consistent utility function, knows all the alternatives that are available for choice, can compute the expected value of utility associated with each alternative, and chooses the alternative that maximizes expected utility. Bounded rationality, a rationality that is consistent with our knowledge of actual human choice behavior, assumes that the decision maker must search for alternatives, has egregiously incomplete and inaccurate knowledge about the consequences of actions, and chooses actions that are expected to be satisfactory (attain targets while satisfying constraints).

We distinguish diagrammatic from sentential paper-and-pencil representations of information by developing alternative models of information-processing systems that are informationally equivalent and that can be characterized as sentential or diagrammatic. Sentential representations are sequential, like the propositions in a text. Diagrammatic representations are indexed by location in a plane. Diagrammatic representations also typically display information that is only implicit in sentential representations and that therefore has to be computed, sometimes at great cost, to make it explicit for use. We then contrast the computational efficiency of these representations for solving several.illustrative problems in mathematics and physics.

p. 65

In view of the dramatic effects that alternative representations may produce on search and recognition processes, it may seem surprising that the differential effects on inference appear less strong. Inference is largely independent of representation if the information content of the two sets of inference rules [one operating on diagrams and the other operating on verbal statements] is equivalent—i.e. the two sets are isomorphs as they are in our examples

[Even Darwin’s] natural selection only predicts that survivors will be fit enough, that is, fitter than their losing competitors; it postulates satisficing, not optimizing.

p. 166; As cited in Ronald J. Baker (2010, p. 122).

Computers were within my sphere of attention, but only computers used as number crunchers. In spite of the "giant brain" metaphor, there is little suggestion in this 1950 talk that the most important application of computers might lie in imitating intelligence symbolically, not numerically.

p. 199.

The true line is not between “hard” natural science and “soft” social sciences, but between precise science limited to highly abstract and simple phenomena in the laboratory and inexact science and technology dealing with complex problems in the real world.

p. 302.

Since my world picture approximates reality only crudely, I cannot aspire to optimize anything; at most, I can aim at satisficing. Searching for the best can only dissipate scarce cognitive resources; the best is the enemy of the good. (p.361)

The empirical research of the last fifteen years on the structure of large organizations seems to confirm the hypothesis of Herbert Simon that human cognitive limits are a basic limiting factor in determining organization structures .

Herbert A. Simon's scientific output goes far beyond the disciplines in which he has held professorships: political science, administration, psychology and information sciences. He has made contributions in the fields of science theory, applied mathematics, statistics, operations research, economics and business and public administration (and), in all areas in which he has conducted research, Simon has had something of importance to say.

From the official Nobel Prize announcement of the Royal Academy of Sciences in Sweden, as cited in "A Tribute To Herbert Simon" at cs.cmu.edu, 2012.

He used to give us a hard time. He likes to take on the devil's advocate role. In his Sciences of the Artificial he's pretty balanced.

He was rightly complaining about some, if not a lot, of the economic literature at the time that he was moving away from economics. I have a couple of comments. I think a lot of the models that we have now, with the dynamics and the uncertainty, address a lot of the observations that were troubling Herb Simon. He is, by the way, a big proponent of positive economic methods.

All that most economists know about Herbert Simon is that he wrote about bounded rationality and organizational behavior.

Mie Augier, James G. March (2004) Models of a Man: Essays in Memory of Herbert A. Simon. p. 259.

Much of the pioneering work in organization theory was written about public organizations, or with public organizations in mind. When Weber wrote about bureaucracy, he was thinking of the Prussian civil service. Philip Selznick began his scholarly career writing about the New Deal Tennessee Valley Authority in TVA and the Grass Roots (1953). Herbert Simon’s first published article (1937) was on munipical government performance measurement, and Simon also coauthored early in his career a book called Public Administration (1950) and a number of papers (e.g., Simon, 1953) published in Public Administration Review.